A Credit Union is a profit sharing, democratically run financial co-operative which offers convenient savings and low interest loans to its members. The members own and manage their credit union themselves.
Credit Unions are now well established all over the world, they started in Germany 150 years ago and spread throughout Europe, to North America, Canada, Asia and to Ireland. In fact one third of the adults in Ireland are members of a credit union and they prefer to save within their local Credit Union rather than within a bank.
Credit unions are steadily increasing throughout the UK both in communities and the work place. ( e.g. Police Force, British Airways, Fire Service, local authority employees etc).
The three main aims of a Credit Union are:
To encourage its members to save regularly.
To provide loans to members at very low rates of interest.
To provide members with help and support on managing their financial affairs (if required).
Credit Unions are usually local affairs and the people who save and borrow from them share a common bond of region or workplace. Regional Credit Unions are usually well supported by churches, community groups, consumer councils, local CAB's, trading standards, police, fire services and even local taxi companies.
Credit unions can provide a focal point for a community by bringing people together, to work alongside each other for their own benefit and the benefit of the community as a whole and can help to revive the local economy by keeping money in the community. Loans to members can mean income for local shops and businesses.
How can you invest in a Credit Union?
The members make regular savings, as little or as much as they wish. These savings then form a common pool of money from which loans are made to members. When members have been saving for a certain period of time they can apply for a loan from the pool. Interest on the loan is charged at only 1% per month on the monthly reducing balance. 12.68% Annual Percentage Rate (APR).
But Credit Unions do need to have reserves and these are usually provided by larger savings accounts being opened by local businesses, councils or by local philanthropists who can combine investment with support of the local community.
As a Credit Union grows it may declare a dividend at the end of the financial year. It can pay a dividend of up to 8% a year, although it will be unlikely to be able to afford as much as this during the first few years, however well established Credit Unions are paying a consistent 8% in returns, and your money is put at less risk than it would be with most major banks as Credit Unions do not get involved in complex trading schemes.
Add to that Credit Unions have to be registered with the Financial Services Authority, they are covered by the Credit Union Act 1979, they are independently audited and they are regularly monitored by the FSA. All this means that your money is quite safe. In fact during the recent banking crisis not one single UK Credit Union was affected.
Your business is private in the credit union because all members and Officers who have access to personal information must act in a confidential manner at all times.
Credit Unions are insured against fraud and theft, they provide life and loan protection insurance at no direct cost to the member payable to a nominated beneficiary.
The life savings insurance means that if you die, your beneficiary can receive up to twice the value of your shares.
The loan protection insurance covers the amount of loan outstanding.
Credit Unions are certainly growing in popularity and there is probably one active near you, just check Google or enquire at your local CAB.
Credit Unions are now well established all over the world, they started in Germany 150 years ago and spread throughout Europe, to North America, Canada, Asia and to Ireland. In fact one third of the adults in Ireland are members of a credit union and they prefer to save within their local Credit Union rather than within a bank.
Credit unions are steadily increasing throughout the UK both in communities and the work place. ( e.g. Police Force, British Airways, Fire Service, local authority employees etc).
The three main aims of a Credit Union are:
To encourage its members to save regularly.
To provide loans to members at very low rates of interest.
To provide members with help and support on managing their financial affairs (if required).
Credit Unions are usually local affairs and the people who save and borrow from them share a common bond of region or workplace. Regional Credit Unions are usually well supported by churches, community groups, consumer councils, local CAB's, trading standards, police, fire services and even local taxi companies.
Credit unions can provide a focal point for a community by bringing people together, to work alongside each other for their own benefit and the benefit of the community as a whole and can help to revive the local economy by keeping money in the community. Loans to members can mean income for local shops and businesses.
How can you invest in a Credit Union?
The members make regular savings, as little or as much as they wish. These savings then form a common pool of money from which loans are made to members. When members have been saving for a certain period of time they can apply for a loan from the pool. Interest on the loan is charged at only 1% per month on the monthly reducing balance. 12.68% Annual Percentage Rate (APR).
But Credit Unions do need to have reserves and these are usually provided by larger savings accounts being opened by local businesses, councils or by local philanthropists who can combine investment with support of the local community.
As a Credit Union grows it may declare a dividend at the end of the financial year. It can pay a dividend of up to 8% a year, although it will be unlikely to be able to afford as much as this during the first few years, however well established Credit Unions are paying a consistent 8% in returns, and your money is put at less risk than it would be with most major banks as Credit Unions do not get involved in complex trading schemes.
Add to that Credit Unions have to be registered with the Financial Services Authority, they are covered by the Credit Union Act 1979, they are independently audited and they are regularly monitored by the FSA. All this means that your money is quite safe. In fact during the recent banking crisis not one single UK Credit Union was affected.
Your business is private in the credit union because all members and Officers who have access to personal information must act in a confidential manner at all times.
Credit Unions are insured against fraud and theft, they provide life and loan protection insurance at no direct cost to the member payable to a nominated beneficiary.
The life savings insurance means that if you die, your beneficiary can receive up to twice the value of your shares.
The loan protection insurance covers the amount of loan outstanding.
Credit Unions are certainly growing in popularity and there is probably one active near you, just check Google or enquire at your local CAB.